The Economics of Obesity: A Q&A With the Author of The Fattening of America

We’ve blogged about obesity at length here at Freakonomics. The health economist Eric Finkelstein has been studying the subject for years, and, along with co-author Laurie Zuckerman, has just published a book, The Fattening of America, which analyzes the causes and consequences of obesity in the U.S. Finkelstein agreed to answer our questions about the book.

Q: You state that the factors contributing to the dramatic rise in American (and worldwide) obesity, from air conditioning to restaurant portions to modern medications, are all fundamentally economic issues. What are the most significant ways modern society has made it easier to be obese?

A: Modern society is giving Americans many more incentives to gain weight than to lose it. We are, in fact, victims of our success as a nation. The two most obvious factors are: 1) the abundance of cheap, tasty foods; and 2) the new technologies that allow us to be increasingly more productive at work and at home while burning fewer calories. For example, between 1980 and 2005, the price of food fell 14 percent relative to non-food items, so it is thus not surprising that we are eating more food.

And what kind of foods are we eating? Well, consider the French fry. Fries, if made from scratch, take about 40 minutes to prepare, complete with peeling, slicing, and messy, splattering oil. Frozen French fries? Ready to eat in under 14 minutes. And that’s still a lot of work compared to just stopping at a drive-through on the way home from work. To an economist, then, it is no shocker that the average American now consumes almost 60 pounds of frozen potato products per year, more than triple the amount consumed per person in 1965.

And at the same time, we’re burning less calories. No surprise here. We all know that we are spending more time watching TV, but there are also less obvious culprits that are keeping us ensconced in our chairs. One example is that I recently had an inexpensive printer installed in my office. So now I don’t even have to walk the 100 steps to the community printer down the hall a few times a day.

But technology hasn’t just made our jobs and our lives easier; we can also pop some pills or get out clogged arteries cleaned out with relative ease, thus lowering the health costs of obesity. In fact, research by the Center for Disease Control reveals that today’s obese population has better blood pressure and cholesterol values than normal-weight adults did 30 years ago. As any economist worth his weight will tell you, if the costs of being obese go down, and there are people who like to eat and don’t like to exercise, we are bound to see obesity rates go up.

Q: Is obesity really an “epidemic”? If we were to let the current obesity rates continue unchecked, what would the outcome be?

A: Over the past three decades, the number of obese Americans has more than doubled. But whether or not we call obesity an “epidemic” largely depends on how the word is defined. If one defines an epidemic as the rapid increase in the occurrence of something, then yes, obesity is an epidemic. Of course, we also have an epidemic of flat panel TVs. My family was recently afflicted with one of those. If an epidemic requires the spreading of a disease from person to person in a locality where the disease is not permanently prevalent, as Dictionary.com defines it, then I would say no, obesity does not qualify as an epidemic.

The reality is that no matter how we label it, as long as there is a demand for labor saving devices and cheap, tasty food, there will be a significant obesity problem. The United States has the most advanced economy in the world, so we saw the obesity spike first, but other nations are quickly catching up. Of course, even in this obesity-inducing environment, many people are finding ways to stay thin and, given the large profit motive, companies are working hard to help people do so. As a result, I find it hard to believe that obesity rates could ever reach the dire levels that some have predicted. In fact, recent evidence suggests that obesity rates may be slowing among adults.

Q: From an economic standpoint, should we be diverting so many resources, public and private, to fighting obesity? Would it make more sense to let obesity rates keep rising, and focus instead on treating and preventing the medical conditions (heart disease, diabetes, etc.) to which obesity contributes?

A: This is the $93 billion question. That is how much obesity is costing the nation every year.

When it comes to the private sector, the market should be allowed to freely determine the optimal amount of resources to invest in obesity prevention and treatment. As noted above, there is a huge demand for products and services aimed at reducing rates of obesity. I am not just talking about drugs and devices, I’m also talking about cool new technologies such as Dance Dance Revolution and the Wii, which use technology to re-engineer physical activity back into our lives. I just bought these for my family.

In The Fattening of America, I make the argument that the government should revisit past policies that may have inadvertently helped promote the rise in obesity rates. I point not only to our agricultural subsidy policies for farmers, but also to zoning laws that discourage pedestrian transportation, subsidies to employers for providing health insurance, and even the existence of the Medicare program. All of these in some way blunt the incentives to invest in prevention, be it for obesity or other conditions.

I do want to point out that the government’s primary motivation is not to reduce costs to Medicare and Medicaid. If it were, they could just stop funding these programs altogether. There may be good reasons to invest in preventive care, but there is little evidence to date that document any long-term savings associated with obesity prevention efforts. If the government funds these and they do not work, they only serve to raise our taxes even more.

Q: A recent Dutch study found that it costs more to provide medical care for healthy people than the obese or smokers, who tend to live shorter lives. What do you make of these results? Are they different from, or similar to studies you address in your book?

A: I am familiar with that analysis. It is well known that smokers tend to subsidize non-smokers because the former pay so much in taxes and die before they can collect their due in social security and Medicare benefits. The researchers’ finding that obese people also cost less is new, and probably not correct for a U.S. population.

It is well established in the U.S. that obese individuals cost more than normal weight individuals at each age of life. I have published several papers showing that result. Recent studies by Fontaine and Flegal also show a relatively small impact of obesity on mortality for BMIs less than 35 (about 70 pounds overweight). As a result, higher age-specific costs and only a slightly shorter life expectancy suggest that the lifetime costs of obesity are indeed positive for most obese adults. The same goes for overweight adults, as they do not seem to have any shorter life expectancy. So I doubt their results for obesity are accurate for the U.S. population.

But let’s suppose they were. Should we give away free Krispy Kreme donuts because obesity saves money? My son would love that, but sorry son, the answer is no. I argue in my book that high costs should motivate employers to address obesity rates, but saving money is not an appropriate reason for government intervention. If it were, then the government should be giving away free cigarettes. Moreover, when it comes to obesity, any effort by the government to encourage people to lose weight, unless it saves more money than it costs, will only raise our taxes even more, regardless of whether or not the measure is effective at getting people to lose weight. Unfortunately, cost-saving obesity interventions have yet to be identified. So until they do, obesity may be taking two significant bites out of the government coffers.

Q: How much should the government really legislate obesity? What programs/efforts would be the most beneficial? Who should they target (e.g., children, low-income adults)?

A: In my book, I talk a lot about my Uncle Al, a smart and successful attorney who also happens, not by accident, to be very overweight. In fact, he’s overweight because instead of spending his time dieting and exercising, he has spent his time building a very successful law firm. I see no reason why the government should get Uncle Al to change his behavior if he does not want to. Even for low-income individuals, any effort to force people to change their behavior will only serve to make them worse off (even if they do become thinner). So no, for adults, I do not think the government can, or even should, legislate obesity away.

In sharp contrast, children are unable to make rational choices, unlike Uncle Al. I think that the government (and parents) have a critical role to minimize the possibility of children growing up to regret the diet and exercise choices they may have made as uninformed youths. Most government interventions are focused on schools, which makes sense given that the food the lunch ladies serve up is too often not that different from the birthday fare my son receives at Chuck E. Cheese. And then, of course, there’s the school vending machines. In my book, we discuss what’s happening in America’s school cafeterias, gymnasiums, and classrooms, and what can be done to help tomorrow’s adults make informed diet and exercise choices.

Q: Can the current obesity trend be summed up as an issue of “personal and immediate benefits” versus “longterm and widespread social costs”? Why or why not?

A: People often like to compare the current obesity “epidemic” with smoking. I think the two are very different. Smokers, by virtue of second-hand smoke, impact non-smokers. As a result, the government has a clear justification for attempting to limit exposure to second-hand smoke (although, in my opinion, some of their policies have gone well beyond resolving market failures).

I see more similarities between obesity and motorcycle helmet laws. If someone wants to ride a motorcycle without a helmet, and take the risk of getting into an accident that would almost surely result in a major trauma, why do we really care? I think the answer is that we don’t want our hard-earned tax dollars to pay for this individual’s “poor” choice. It really boils down to money, and the fact that we live in a society that would not allow this person to bleed out in spite of the fact that he or she knowingly made a choice that made a major injury far more likely. So, to solve this problem, and because those who ride motorcycles are in the minority, we pass mandatory motorcycle helmet laws.

With respect to obesity among adults, I think the issue is one in the same. Nobody wants to pay for my Uncle Al’s excess weight. The primary difference is that with overweight and obese individuals representing two-thirds of the population, passing laws that limit choice, such as we did with the motorcycle helmets, is unlikely to happen any time soon.

Q: Dubner and Levitt recently discussed the unintended consequences that can result from government legislation intended to change behavior or help certain groups — what are the most likely unintended consequences of obesity-prevention legislation?

A: It is very difficult for the government to pass legislation without having unintended consequences. For example, some have suggested that No Child Left Behind may be a factor in rising obesity rates, by helping to eliminate gym class from schools and forcing kids to study harder. Truth or fiction — you get the point. When it comes to obesity legislation, there is no such thing as a free lunch. Getting junky foods out of schools, for example, will not only hurt food companies, but also reduce the revenue for schools to fund other activities. At the end of the day, the choice will be to weigh the costs and benefits to see whether the legislation is better than the status quo.

Q: Is the rise in obesity rates the result of market failures?

A: No. I would say it is just the opposite. The rise in obesity rates is resulting from market forces that are bringing us low-cost products and services that make us more productive at work and at home, and that provide us with highly valued leisure time activities.

For example, consider the microwave. While only 8 percent of American homes had microwaves in 1978, 95 percent currently have them. They make it quick and easy to get food on the table. Then take carbonated beverages. They make up 7 percent of all calories consumed. They would be more expensive without heavy farm subsidies, but not that much more. Also, how many cars today require manually “rolling up” the windows? That term shouldn’t even exist any more. Car windows, along with countless other things, are now automated.

These are a few of the thousands of examples of new products and services that allow us to save a few calories here and there, or consume a few extra calories for not much time or money. In my book, I compare our modern lifestyle to that of the Amish. We could all eschew technology and choose to live like the Amish, but who would want to? That’s a pretty high price to pay to be thin.

In my opinion, obesity is more the result of the success — not the failure — of the market. This is not to say that market failures do not exist, or should not be addressed. My only point is that were we to address them all, obesity rates would still be dramatically higher (although perhaps not quite as high) today than they were a few decades back. But on net, we are still better off.

Q: Is being obese more, less, or equally costly for individuals now than it was twenty years ago?

A: We’ve already discussed how it’s cheaper and easier to be overweight today than it was a few decades back. In addition, thanks to advances in medical technology, the health costs of obesity continue to decline. Among today’s obese population, the prevalence of high cholesterol and high blood pressure are now 21 and 18 percentage points lower, respectively, than they were among obese individuals 30 to 40 years ago. In fact, obese individuals today have better cardiovascular disease risk factor profiles than normal-weight individuals had 30 years ago.

What is driving this surge in improved health profiles for obese individuals? The answer, as you might have guessed, is a dramatic improvement in drugs and devices. Many drugs have been introduced over the past 40 years that effectively treat cholesterol, blood pressure, and other risk factors and diseases that obesity promotes. One million operations were performed in the U.S. last year to unclog clogged arteries. In the past, diet, exercise, and weight loss might have been the primary treatment to help control risk factors resulting from excess weight; today, one has the option of taking a pill or having surgery. Many individuals, including my Uncle Al, feel that diet and exercise are consequently optional.

COMMENTS: 66

While I have to wonder if the goverment can legislate here, I think they can tax prohitively since we are the ones who are going to wind up footing the medical bills of the poor and obese becuase of the availability of so many cheap carbs.

There are. Vegetables and fruit are always cheap. At my grocery store, I can get a bag of carrots for 89 cents. Or I can get a bag of precut and peeled carrots for a bit more. Bananas are about 25 cents each.

But one could make the argument that fast food is cheaper in the sense that you get more calories per dollar. So a hamburger for 50 cents may seem a better value than 2 bananas or several carrots.

The focus on obesity seems a little off the mark. A person who is technically obese (not just overweight) and can ride a bike for 30 minutes without stopping is much healthier, cheaper, and will live longer than a person who has a normal weight but can’t walk briskly for five minutes.

About a dozen years ago, our then-local high school decided to “get tough on obesity” and weighed all the kids. If you were overweight according to a height-weight ratio, they then did a sophisticated water-displacement test for body fat. Anyone who was deemed to be fat was required to take extra phys ed classes until they lost the extra fat.

It seems to me that they would have done more good for their students if they’d said: Four laps is a mile on this track, and every student needs to be able to cover that distance in less than 15 minutes.

This would have put my very-sedentary-but-very-skinny neighbor on a track to health. (This little girl had a remarkable number of excuses for getting out of the normal phys ed classes. One day she demanded to be taken to the hospital because “the skin on my hand turned a little red and was kind of stinging for a minute where I hit the volleyball.”)

The reason that cheap, healthy veggies are not available in this country is the massive amount of subsidies the American farm industry receives, along with protective trade agreements. The “big five” – corn, soybeans, wheat, cotton and rice, receive almost all of these subsidies, whereas the asparagus farmer gets little to none.

Obesity, like smoking, is indeed chosen, but it almost invariably causes long-run regret. It’s a lack of self-commitment mechanisms that is at play here. Odysseus famously had his men tie him to the mast in order to avoid the tempation of the Sirens’ song–why can’t we have that same option?

I would say that obesity really is a market failure. Sure we may get our cheap jollies from a quick snack of Twinkies, but most of us have metapreferences not to find ourselvs having finished the whole bag of chips in one sitting. If reliable commitment mechanisms were available whereby individuals could reliably restrict their choice sets away from Hohos and towards whole-grain, I think they would be hugely popularity.

Ask a couple of long-time smokers if they’re glad they started smoking. Ask some morbidly obese people if they wish Big Macs had never been invented. Look at the sales of Alli, a drug whose main appeal is the nasty effects it imposes a cost of slamming a Star Cake.

I’d say the absence of reliable anti-obesity commitment mechanisms is the real evidence of a market failure. Contra Finkelstein, I’d bet that support for anti-obesity laws will only grow with American waistlines. Fat people usually regret their decisions.

Is this author suggesting that Wii and Dance Dance Revolution are equivalent to real physical labor, real exercise, or random outdoor play? Ha — that attitude contributes as much to the problem as fast food.